Friday, January 16, 2015

RBI brings existing Project Loans of over ` 500 cr within 5/25 ambit

The Reserve Bank of India (RBI) allowed banks to refinance existing infrastructure projects under
the 5/25 model, provided commercial operations have begun and the total exposure is over ` 500 crore. While the new norms will allow banks to refinance many loans, several projects that are
stuck due to clearances will be out of the ambit of such refinancing.

Guidelines

  • Only projects that have started commercial operation permitted to be refinanced
  • The total exposure of the lenders should exceed ` 500 cr
  • The requirement of 25% of the loan to be refinanced by new lenders scrapped
  • Refinance may be taken up by the same lender or a set of new lenders, or combination of both
  • Existing projects also allowed to be refinanced
  • Accounts classified as non-performing assets could also be refinanced but will nevertheless remain NPA.

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